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TORONTO, ONTARIO--(Marketwire - April 19,
2010) - High River Gold Mines Ltd. (TSX:HRG)("High River" or
the "Company") today reported its financial results and
operational highlights for the year ended December 31, 2009. The
Consolidated Financial Statements and related Notes along with the
Management's Discussion and Analysis have been filed with SEDAR (www.sedar.com) and can
be viewed on the Company's website at www.hrg.ca.
HIGHLIGHTS FOR 2009
Financial Results
-- Net gold revenue of $363.3 million, an increase of 100% from 2008 -- Net loss of $9.8 million ($0.02 per share) compared to a net loss of $57.4 million ($0.16 per share) in 2008 -- Cash flow from operations of $125.5 million, up from $25.6 million last year -- Cash and cash equivalents increased to $82.1 million from $19.1 million last year -- Working capital increased to $95.8 million from a deficit of $42.1 million last year -- Current and long term debt levels decreased to $84.0 million from $188.1 million last year, due mainly to principal repayments and foreign exchange movements -- Prognoz silver project written down by $58.9 million to its estimated fair value
Operations
-- Total gold production increased 52% to 336,366 (2008 - 220,324) ounces (100%). Total cash cost per ounce decreased 21% to US$505 (2008 - US$638 per ounce) -- The Zun-Holba and Irokinda Gold Mines (including placer operations) produced 149,382 ounces (2008 - 145,763) (100%) at a total cash cost of US$494 per ounce -- The Taparko-Bouroum Gold Mine produced 99,536 (2008 - 30,667) ounces (100%) at a total cash cost of US$469 per ounce -- Gold production at Berezitovy was 87,488 ounces (2008 - 43,894 ounces (including volumes preceding commercial production)) (100%), and total cash costs were US$564 -- At the Bissa Gold Project, a significant amount of work was completed during the year, including an infill drilling and trenching programme, resource estimation and metallurgical sampling --------------------------------------------------------------------------- Cash Operating Production (100%) Costs Total Cash Costs Oz US$/Oz US$/Oz --------------------------------------------------------------------------- Buryatzoloto 149,382 433 494 --------------------------------------------------------------------------- Berezitovy 87,448 505 564 --------------------------------------------------------------------------- Somita 99,536 441 469 --------------------------------------------------------------------------- Total 336,366 454 505 ---------------------------------------------------------------------------
2009 total operating and non-operating cash
costs reached US $560 per ounce. Non-operating cash costs per ounce
mainly represent corporate administration, exploration, and other
expenses such as realized foreign exchange losses.
-- Zun-Holba and Irokinda Underground Gold Mines: -- Stable production with no material shortcomings -- On September 11, 2009 the Company announced the death of two of its miners at the Irokinda mine -- Berezitovy Open-pit Gold Mine: -- Production increased from 2008 due to higher plant availability. Production levels continue to be constrained by maintenance shut- downs, disk filter plant under- performance as well as crusher problems -- Taparko-Bouroum Open-pit Gold Mine: -- Production increased compared to 2008 mainly because of better mill availability
Corporate
-- During the year, Terrence Lyons, John Crow, Roman Deniskin, Nikolai Zelenskiy and Stephen Polakoff resigned as Directors. Alexey Khudyakov, Karl Glackmeyer, Igor Klimanov, Andrei Maslov, Andrew Matthews and Richard Ogdon joined the Board. Mr. Khudyakov was also named Chairman. Steven Poad joined the Board and later resigned. -- Steven Poad resigned as CFO, Nikolai Zelenskiy resigned as CEO, Driffield Cameron resigned as Vice President, Exploration and Dan Hrushewsky resigned as Vice President, Investor Relations. Igor Klimanov took on responsibility for investor relations and was also appointed CEO. Andrei Maslov was appointed CFO. -- Standard Bank Plc ("Standard Bank") assigned the US$15,000,000 loan due from High River and the US$12,000,000 loan due from Somita to Severstal, a related party of High River. The loans were repaid in December. -- Severstal acquired 59,019,367 additional shares at $0.18 per share in a non-brokered private placement. -- Severstal announced an offer to acquire all the outstanding shares of the Company for $0.22 per share and subsequently increased its unconditional tender offer to $0.30 per share. Severstal acquired 28,897,135 additional shares as a result of the offer which expired on August 10, 2009. -- On August 6, 2009, the Company announced that the Toronto Stock Exchange determined that High River satisfies the TSX's continued listing requirements. -- On December 2, 2009, High River closed a private placement of 150,000,000 common shares of the Company with Polenica Investments Limited ("Polenica"), an affiliate of Troika Dialog Group ("Troika"). The proceeds of the private placement were used by High River to repay the approximately US$27 million plus accrued interest outstanding under the two credit agreements that were assigned by Standard Bank Plc to Severstal. The balance is being used to fund the exploration program at Buryatzoloto and for general corporate purposes. The private placement was unanimously approved by the Board of Directors of High River. DISCUSSION OF FINANCIAL RESULTS Selected Financial Results ---------------------------- (in thousands of Canadian dollars except per share amounts) 2009 2008 2007 ---------------------------------------------------------------------------- Gold revenue $ 363,259 $ 180,788 $ 115,641 Net loss 9,764 57,447 11,991 Net loss per share (basic) 0.02 0.16 0.05 Cash provided by (used in) operating activities 126,236 25,605 (4,853) Total assets 706,962 753,109 666,055 Loans and interest payable 84,031 188,145 175,263 Weighted average number of shares outstanding (basic) 634,009,385 354,923,765 261,676,314 ----------------------------------------------------------------------------
The Company's consolidated net gold
revenues for 2009 increased to $363.3 million from $180.8 million in
2008. Higher production by Taparko and Berezitovy increased the number
of ounces sold. The average gold price realized on sales was US$976 per
ounce during 2009, up from US$862 in 2008 and up from US$687 in 2007.
The Company had a net loss of $9.8 million in 2009, compared to a net
loss of $57.4 million in 2008 and a net loss of $12.0 million in 2007.
The loss largely reflects the write-down of the Prognoz Silver project
of $58,6 million in Q2 2009.
Cash flow from operations of $125.5 million increased from $25.6 million
in 2008. Cash flow from operations increased from last year largely due
to the higher gold revenue as discussed above.
OVERVIEW OF OPERATIONS
Underground Mines
The Zun-Holba and Irokinda underground gold mines located in Russia and
operated by Buryatzoloto reported no material changes or shortcomings
in their operations during the year and continue to operate according
to plan. Buryatzoloto continues to be profitable and achieved its
production objectives for 2009 with 149,382 ounces (100%) of gold
produced at an estimated total cash cost of US$494 per ounce as
compared to 145,763 ounces at US$580 per ounce in 2008. The weakening
of the Russian Rouble in comparison to the US$ in 2009 compared to 2008
has offset Rouble cost increases due to inflation and increases in
output.
Replacing reserves at these mines is a priority of local management. A
$23 million budget for mine-site exploration is planned for 2010 to
replace mined-out reserves and extend the mine life at Irokinda and
Zun-Holba. In addition, a substantial capital program will be allocated
in the first half of 2010 for capital mining works to prepare the
existing reserves for extraction.
Open Pit Mines
Berezitovy Mine (Russia)
Berezitovy continues to underperform. Production (100%) at Berezitovy
in 2009 was 87,448 ounces of gold, compared to 43,894 ounces produced
in 2008. Production increased from 2008, due to higher throughput.
Production levels continue to be constrained by maintenance shut- downs
and disk filter plant under-performance as well as crusher problems.
Taparko-Bouroum Mine (Burkina Faso)
In 2009, gold poured at Taparko (100%) totaled 99,536 ounces, up
significantly from the 2008 level of 30,667 ounces. The production
increased compared to the previous year mainly because of better mill
availability.
High River believes that many of the technical start-up problems at the
Taparko-Bouroum mill have been resolved. The mill vibration issue that
was of concern has been reduced and will continue to be monitored.
Advanced Exploration Projects
Bissa Gold Project
A significant amount of work related to a feasibility study was
completed during 2009. Infill drilling occurred along three kilometres
immediately adjacent and along strike to the southwest of the Bissa
Resource Area which hosts the current resource. Other work conducted
for the bankable feasibility study included three dimensional
modelling, resource estimation, geotechnical mapping, additional
metallurgical sampling test work, topographical surveying and
environmental work. In addition to activity related to the feasibility
study at Bissa, exploration work occurred on other areas within the
Bissa Group Permits and on other exploration concessions in Burkina
Faso.
Approximately US$2 million is budgeted for completion of the Bissa
feasibility study in 2010 and about US$2 million is recommended for
additional exploration on the Bissa Group Permits. Work planned
includes approximately 5,500 meters of reverse circulation drilling and
about 2,600 meters of diamond drilling with the main drilling targets
being Gougre and Bouly.
Novophirsovskoye Gold Project, Russia
The Company determined that the Novophirsovskoye project is no longer a
key exploration property. A buyer was found for the property and the
project was written down in the third quarter to the sales value of
US$1.0 million. The sale closed in Q4 2009.
About High River
High River is unhedged gold company with interests in producing mines
and advanced exploration projects in Russia and Burkina Faso. Two
underground producing mines, Zun-Holba and Irokinda, are situated in
the Lake Baikal region of Russia. Two open pit gold mines, Berezitovy
in Russia and Taparko-Bouroum in Burkina Faso, are also in production.
Finally, High River has two advanced exploration projects with NI
43-101 compliant resource estimates, the Bissa gold project in Burkina
Faso and a 50% interest in the Prognoz silver project in Russia.
FORWARD LOOKING INFORMATION
This release and subsequent oral statements made by and on behalf of
the Company may contain forward-looking statements. Wherever possible,
words such as "intends", "expects",
"scheduled", "estimates", "anticipates",
"believes", and similar expressions or statements that certain
actions, events or results "may", "could",
"would", "might" or "will" be taken,
occur or be achieved, have been used to identify these forward-looking
statements. Although the forward-looking statements contained in this
release reflect management's current beliefs based upon information
currently available to management and based upon what management
believes to be reasonable assumptions, High River cannot be certain
that actual results will be consistent with these forward-looking
statements. A number of factors could cause events and achievements to
differ materially from the results expressed or implied in the
forward-looking statements. These factors should be considered
carefully and prospective investors should not place undue reliance on
the forward-looking statements. Forward-looking statements necessarily involve
significant known and unknown risks, assumptions and uncertainties that
may cause High River's actual results, event, prospects and
opportunities to differ materially from those expressed or implied by
such forward-looking statements. Although High River has attempted to
identify important risks and factors that could cause actual actions,
events or results to differ materially from those described in
forward-looking statements, there may be other factors and risks that
cause actions, events or results not to be anticipated, estimated or
intended, including those risk factors discussed in the Company's 2008
Annual Information Form. There can be no assurance that the
forward-looking statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, prospective investors should not place
undue reliance on forward-looking statements. Any forward-looking
statements are made as of the date of this release, and High River
assumes no obligation to update or revise them to reflect new events or
circumstances, unless otherwise required by law.
High River Gold Mines Ltd. CONSOLIDATED BALANCE SHEETS (Expressed in thousands of Canadian dollars) As at December 31, 2009 2008 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Assets Current Assets Cash and cash equivalents $ 82,061 $ 19,123 Restricted cash 562 - Accounts receivable 18,115 14,546 Inventory 81,090 79,369 Other assets 12,382 11,401 ---------------------------------------------------------------------------- 194,210 124,439 Investments 64,810 22,724 Property, plant and equipment 340,606 432,089 Exploration properties and deferred exploration 105,061 170,522 Other assets 697 3,335 Future income taxes 1,578 - ---------------------------------------------------------------------------- Total Assets $ 706,962 $ 753,109 ---------------------------------------------------------------------------- Liabilities Current Liabilities Accounts payable $ 39,726 $ 29,842 Loans and interest payable 58,666 136,699 ---------------------------------------------------------------------------- 98,392 166,541 Loans and interest payable 25,365 51,446 Reclamation and closure costs 14,208 10,078 Non-hedge derivatives 13,684 13,651 Future income taxes 20,567 15,884 ---------------------------------------------------------------------------- 172,216 257,600 Non-controlling interest 21,922 18,467 ---------------------------------------------------------------------------- Total Liabilities 194,128 276,067 ---------------------------------------------------------------------------- Shareholders' Equity Share capital 610,770 543,244 Warrants 13,265 16,627 Contributed surplus 15,907 12,876 Debenture conversion option 538 538 Deficit (121,801) (112,037) Accumulated other comprehensive income (5,855) 15,794 ---------------------------------------------------------------------------- Total Shareholders' Equity 512,824 477,042 ---------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $ 706,962 $ 753,109 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- High River Gold Mines Ltd. CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in thousands of Canadian dollars except per share figures) For the years ended December 31, 2009 2008 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue Gold $ 363,259 $ 180,788 Silver 6,090 383 ---------------------------------------------------------------------------- 369,349 181,171 ---------------------------------------------------------------------------- Expenses Mining costs 183,433 125,099 Mine administrative costs 9,717 9,704 Mine amortization and depletion 58,716 27,908 Asset retirement obligation accretion 853 655 Standby costs - 8,707 ---------------------------------------------------------------------------- 252,719 172,073 ---------------------------------------------------------------------------- Income before the undernoted 116,630 9,098 Administrative costs (13,245) (17,057) Amortization (46) (603) Exploration expense (4,330) (10,012) Financing costs and investment income, net (21,699) (14,428) Other expenses (80,026) (14,384) ---------------------------------------------------------------------------- Income before tax and non-controlling interest (2,716) (47,386) Income tax expense (3,593) (9,424) ---------------------------------------------------------------------------- Loss before non-controlling interest (6,309) (56,810) Non-controlling interest in earnings of subsidiary (3,455) (637) ---------------------------------------------------------------------------- Net loss for the year $ (9,764) $ (57,447) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net loss per share - basic and diluted $ (0.02) $ (0.16) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- High River Gold Mines Ltd. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in thousands of Canadian dollars) For the years ended December 31, 2009 2008 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating Activities Net loss for the year $ (9,764) $ (57,447) Non-cash items: Non-controlling interest in earnings of subsidiary 3,455 637 Change in inventory (4,482) 3,315 Amortization and depletion 58,762 28,511 Asset retirement obligation accretion 853 655 Financial instrument accretion 835 (210) Fair value adjustments to financial instruments 1,917 4,697 Stock based compensation 223 1,825 Write-down of exploration 70,764 5,450 Loss on disposal of assets 1,977 7,914 Future income taxes (7,794) 3,633 Unrealized foreign exchange 2,992 (3,904) Other 2,278 (3,136) ---------------------------------------------------------------------------- Subtotal 122,016 (8,060) Change in non-cash working capital 3,480 33,665 ---------------------------------------------------------------------------- Net cash provided by operating activities 125,496 25,605 ---------------------------------------------------------------------------- Investing Activities Property, plant and equipment (25,798) (25,233) Proceeds on disposal 1,756 7 Exploration properties and deferred exploration (8,484) (32,134) Development properties - (28,352) Purchase of investments - (10,802) Proceeds from sale of investments - 2,715 Allocation of restricted cash (562) 72 Purchase of other long-term assets 168 (204) ---------------------------------------------------------------------------- Net cash used by investing activities (32,920) (93,931) ---------------------------------------------------------------------------- Financing Activities Loans received 12,331 46,409 Loans repaid (106,781) (98,666) Common shares issued 67,511 86,491 ---------------------------------------------------------------------------- Net cash provided by (used by) financing activities (26,939) 34,234 ---------------------------------------------------------------------------- Effect of exchange rate changes on cash held in foreign currencies (2,699) 1,724 ---------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents during the year 62,938 (32,368) Cash and cash equivalents - Beginning of year 19,123 51,491 ---------------------------------------------------------------------------- Cash and cash equivalents - End of year $ 82,061 $ 19,123 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
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